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SaviBank Earns $154,000 in Fourth Quarter of 2019 and $1.41 Million for the Year; Loans Increase 16% and Deposits Increase 19%, Year-Over-Year

BURLINGTON, Wash., Jan. 27, 2020 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported fourth quarter 2019 earnings of $154,000, or $0.04 per diluted share, compared to $674,000, or $0.16 per diluted share, in the fourth quarter of 2018. For the year 2019, earnings were $1.41 million, or $0.33 per diluted share, compared to $2.24 million, or $0.52 per diluted share, in 2018. Fourth quarter and full year earnings were impacted by lower SBA production, and an increase in operating costs as a result of implementing the company’s branch expansion strategy.

“The highlight of our 2019 results was the strong loan and deposit growth we generated as a result of our organic expansion within our markets,” said Michal D. Cann, Chairman and CEO. “During the year we opened three new branch locations, relocated two branches and relocated and expanded a loan production office into a full-service branch. While the costs associated with this expansion impacted our results for the year, we now have both the infrastructure and the people in place to grow the company.

“As we look to 2020, we remain focused on improving our operating performance. Our markets in Northwest Washington continue to generate excellent opportunities for growth, and we are well positioned to expand our market share and improve our earnings,” added Cann.

Total revenue, consisting of net interest income and non-interest income, totaled $3.22 million in the fourth quarter of 2019, compared to $3.21 million in the preceding quarter and $3.19 million in the fourth quarter a year ago. For the year, revenues increased 13% to $13.2 million, from $11.7 million in 2018.

“We continue to focus on growing our SBA lending team and expanding our lending relationships; however, the government shutdown earlier in the year contributed to lower SBA loan production compared to the prior year,” said Andrew Hunter, President. SBA and USDA loan production for the twelve months ended December 31, 2019, totaled 15 loans for $8.37 million, compared to production of 25 loans for $10.73 million in the year-ago period.

“The three interest rate reductions during the last six months, combined with increased competition for deposits, contributed to our net interest margin compression during the quarter; however, our strong loan growth and higher loan yields continue to keep our net interest margin above industry averages,” said Hunter. Net interest margin was 4.08% in the fourth quarter of 2019 from 4.15% in the preceding quarter and 4.48% in the fourth quarter a year ago. The net interest margin remains higher than the peer average of 3.67% posted by the 418 banks that comprised the SNL Microcap U.S. Bank Index at September 30, 2019. For the full year, net interest margin remained healthy at 4.30% compared to 4.42% in 2018.

Fourth Quarter 2019 Highlights:

  • Pretax income was $198,000 in the fourth quarter, compared to $855,000 in the fourth quarter of 2018, and $452,000 in the third quarter of 2019.

  • Earnings per diluted share were $0.04 in the fourth quarter, compared to $0.16 in the fourth quarter a year ago and $0.08 in the preceding quarter.

  • Net interest income increased 10% to $2.94 million in the fourth quarter of 2019, compared to $2.67 million in the fourth quarter a year ago, and was down slightly from $2.95 million in the third quarter of 2019.

  • Average fourth quarter total loans increased 20%, to $257.3 million, compared to $214.2 million in the fourth quarter year ago, and grew 2% from $251.7 million in the third quarter of 2019. Total loans at December 31, 2019, increased 16% to $264.2 million from $227.6 million a year ago and grew 4% from $254.9 at September 30, 2019.

  • Average fourth quarter total deposits grew 23% to $252.4 million from $204.5 million, in the fourth quarter a year ago, and increased 1% from $250.2 million in the third quarter of 2019. Total deposits grew 19% to $248.6 million, at December 31, 2019, from $208.4 million a year ago, and decreased 3% from $256.2 million at September 30, 2019.

  • Asset quality remained strong with nonperforming loans at 0.07% of total loans at December 31, 2019, the same as three months earlier. At December 31, 2018, there were no nonperforming loans.

  • Nonperforming assets (“NPAs”) were 0.21% at December 31, 2019, compared to 0.16% a year ago and 0.24% three months earlier. The current NPAs reflects the stability of the loan portfolio and paydowns in principle balances.

  • Net charge-offs were 30,000 in the fourth quarter of 2019, compared to net charge-offs of $4,000 in the fourth quarter a year ago, and net recoveries of $7,000 in the preceding quarter. The increase during the fourth quarter 2019 was due to a $48,000 write down on an OREO property.

  • Allowance for loan losses, as a percentage of total loans, was 1.00% at December 31, 2019 and December 31, 2018.

  • SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 11.67% and the tier-1 leverage ratio was 9.97% at year end.

“During the year, we expanded our Northwest Washington franchise in an effort to take advantage of market disruption,” said Cann. “We opened a full-service branch in Concrete on October 7, 2019, and we relocated our loan production office into a full-service branch in Anacortes on September 9, 2019. Additionally, we relocated to our new Oak Harbor branch at the end of May, relocated our main Burlington branch in March, opened our Sedro Woolley branch in March and opened a Mt. Vernon branch in January. As a result, costs associated with this expansion have affected operating results for both the current quarter and the full year. We believe that by investing in these additional locations, with talented banking teams in place, we have the components to increase our franchise value.”

About Northwest Washington

SaviBank currently operates six branches in Skagit County, two branches in Island County, and one branch in Whatcom County.

The Skagit, Whatcom and Island counties region stretches north from the greater Seattle/Everett/Bellevue metropolis to the Canadian border. Northwest Washington continues to be one of the most vibrant regions in the country, with a solid employment base, moderate climate and a strong housing market.

The housing market in Skagit, Island and Whatcom Counties remains healthy. According the Northwest Multiple Listing Service, the average home in Skagit County sold for $369,900, up 3.61% in December 2019 compared to a year ago, and there was a 1.79 month supply of homes on the market. For Island County, the average house sold for $379,500, up 11.78% from a year ago and supply totaled 1.74 months. For Whatcom County, the average home sold for $379,900, down 0.70% from a year ago and supply totaled 2.24 months.

Skagit County’s economy is dominated by manufacturing, which accounts for 33.4% of GDP with food, machinery and oil and petroleum products the leading contributors. Skagit’s population is projected to grow 5.71% from 2020 through 2025, and median household income is projected to increase by 16.18% during the same time frame.

Whatcom County is home to Western Washington University and is the nation’s largest producer of raspberries. Whatcom County’s population is projected to grow 6.26% from 2020 through 2025, and median household income is projected to increase by 13.28%.

Island County is home to Naval Air Station Whidbey Island. Whidbey Island’s population is 86,280, with approximately 23,575 in Oak Harbor. Island County’s population is projected to grow 5.19% from 2020 through 2025 and median household income is projected to increase by 6.07%.

Sources:

http://www.northwestmls.com/library/CorporateContent/statistics/Recaps.pdf
www.SNL.com
https://www.usnews.com/news/best-states/rankings

About Savi Financial Corporation Inc. and SaviBank –

Savi Financial Corporation is the bank holding company of SaviBank. The Bank began operations April 11, 2005, and has 9 branch locations in Anacortes, Burlington, Bellingham, Concrete, Mount Vernon, Oak Harbor, Freeland and Sedro-Woolley, Washington. The Bank provides loan and deposit services to customers who are predominantly small and middle-market businesses and individuals in and around Skagit, Island, and Whatcom counties. As a locally-owned community bank, we believe that when everyone becomes Savi about their finances, our entire community benefits. Call us or stop by one of our branches and we’ll show you how to bank Savi. For additional information about SaviBank visit http://www.savibank.com.

Forward Looking Statement

This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to SaviBank or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy, as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks may have a material adverse impact on our operations and business.

SELECTED FINANCIAL DATA

(In thousands of dollars, except for ratios and per share amounts)

Unaudited

Three Months Ended

Year Ended

December 31, 2019

December 31, 2018

Var %

September 30, 2019

Var %

December 31, 2019

December 31, 2018

Var %

SUMMARY OF OPERATIONS

Interest income

$

3,750

$

3,248

15

%

$

3,820

(2

)%

$

15,096

$

11,525

31

%

Interest expense

(808

)

(579

)

40

(866

)

(7

)

(3,197

)

(1,828

)

75

Net interest income

2,942

2,669

10

2,954

(0

)

11,899

9,697

23

Provision for loan losses

(123

)

(177

)

(31

)

(30

)

2

(428

)

(314

)

36

NII after loss provision

2,819

2,492

13

2,924

(4

)

11,471

9,383

22

Non-interest income

282

517

(45

)

252

12

1,285

1,953

(34

)

Non-interest expense

(2,903

)

(2,154

)

35

(2,724

)

7

(10,956

)

(8,491

)

29

Income before tax

198

855

(77

)

452

(56

)

1,800

2,845

(37

)

Federal income tax expense

44

181

(76

)

99

(56

)

387

605

(36

)

Net income

$

154

$

674

(77

)%

$

353

(56

)%

$

1,413

$

2,240

(37

)%

PER COMMON SHARE DATA

Number of shares outstanding (000s)

3,433

3,423

0

%

3,433

0

%

3,433

3,423

0

%

Earnings per share, diluted

$

0.04

$

0.16

(77

)

$

0.08

(56

)

$

0.33

$

0.52

(37

)

Market value

11.65

10.50

11

10.45

11

11.65

10.50

11

Book value

9.55

9.09

5

9.50

0

9.55

9.09

5

Market value to book value

121.99

%

115.48

%

6

109.97

%

11

121.99

%

115.48

%

6

BALANCE SHEET DATA

Assets

$

312,523

$

267,723

17

%

$

310,134

1

%

$

312,523

$

267,723

17

%

Investments securities

9,767

11,091

(12

)

10,805

(10

)

9,767

11,091

(12

)

Total loans

264,242

227,625

16

254,960

4

264,242

227,625

16

Total deposits

248,628

208,437

19

256,228

(3

)

248,628

208,437

19

Borrowings

30,000

27,000

11

20,000

50

30,000

27,000

11

Shareholders’ equity

32,786

31,123

5

32,623

0

32,786

31,123

5

AVERAGE BALANCE SHEET DATA

Average assets

$

311,329

$

257,417

21

%

$

304,933

2

%

$

290,123

$

234,748

24

%

Average total loans

257,307

214,173

20

251,662

2

246,362

196,593

25

Average total deposits

252,428

204,519

23

250,242

1

228,533

180,636

27

Average shareholders' equity

32,705

30,759

6

32,432

1

31,955

29,991

7

ASSET QUALITY RATIOS

Net (charge-offs) recoveries

$

(30

)

$

(4

)

N/M

$

7

N/M

$

(62

)

$

(16

)

288

Net (charge-offs) recoveries to average loans

(0.05

)%

(0.01

)%

N/M

0.01

%

N/M

(0.03

)%

(0.01

)%

209

Non-performing loans as a % of loans

0.07

0.00

N/M

0.07

1

0.07

0.00

N/M

Non-performing assets as a % of assets

0.21

0.16

34

0.24

(11

)

0.21

0.16

34

Allowance for loan losses as a % of total loans

1.00

1.00

(0

)

0.99

1

1.00

1.00

(0

)

Allowance for loan losses as a % of non-performing loans

1,420.43

113,850.00

(99

)

1,361.29

4

1,420.43

113,850.00

(99

)

FINANCIAL RATIOSSTATISTICS

Return on average equity

1.88

%

8.76

%

(79

)%

4.35

%

(57

)%

4.42

%

7.47

%

(41

)%

Return on average assets

0.20

1.05

(81

)

0.46

(57

)

0.49

0.95

(49

)

Net interest margin

4.08

4.48

(9

)

4.15

(2

)

4.30

4.42

(3

)

Efficiency ratio

88.69

66.43

34

83.73

6

81.90

71.33

15

Average number of employees (FTE)

92

76

21

98

(6

)

92

76

21

CAPITAL RATIOS

Tier 1 leverage ratio -- Bank

9.97

11.29

(12

)%

10.07

(1

)%

9.97

11.29

(12

)%

Common equity tier 1 ratio -- Bank

10.70

11.74

(9

)

10.85

(1

)

10.70

11.74

(9

)

Tier 1 risk-based capital ratio -- Bank

10.70

11.74

(9

)

10.85

(1

)

10.70

11.74

(9

)

Total risk-based capital ratio --Bank

11.67

12.70

(8

)

11.80

(1

)

11.67

12.70

(8

)


Contact:

Michal D. Cann

Chairman, CEO & President

Savi Financial Corporation

(360) 707-2272